Darius McDermott: The fledgling funds I’m backing
Three isn’t always the magic number when it comes to a fund’s track-record
I’m referring, of course, to the number of years’ track record a fund, or its manager, is required to have under its belt, before most people – me included – feel able to highlight the product to clients as a possible investment choice.
A three-year track record is also the minimum timescale required for a fund to be considered for an Elite Rating by FundCalibre. Our proprietary screening tool – which strips out market movements to lay bare the value added (or not) by a fund manager – needs at least this amount of data to give an accurate reading of any alpha generated, and to basically tell if a fund manager has just been lucky or is actually skilled at picking stocks.
But very occasionally a new fund is launched – maybe by a manager I already know well, or with a tried and tested process – that I think is worth taking the risk and backing at an early stage.
It’s these rare, but exciting, opportunities that led us to launch the Elite Radar last year: a list of young funds we have on a watch list, that others may like to monitor too.
Click through the slides above to see three funds, each less than a year old, that I think could make core funds in the future.